Ohio  |  Business Law

Legal Question

Asked on: 1/20/10, 2:16 pm

Purchasing Real Estate with Business

My question involves business law in the state of: Ohio, but I think jurisdiction would not matter for this question.

Purchasing real estate with business for sum total of $130,000 with $100,000 allocated to real estate and $30,000 allocated to business, which is an asset only purchase.

I want to have the business in a S Corporation, but own the real estate in my own name. Is this wise? More info: the real estate actually has two buildings: one is an apartment (rented out) and the other building is for the business, which may have drunk patrons; not a bar, but allows bring your own beer.

Should I incorporate first, then contribute $30,000 into the corporation and pay $100,000 from my own name for the real estate? Or is it okay to pay $30,000 for the business assets, then transfer those assets into the corporation? Is it okay to own the real estate in my own name? I know a business/tenant can sue the landlord, but since I would own the business and property, that would not be an issue. Can a customer of the business sue the landlord?

From a tax perspective, it's usually not wise to own real estate in a corporation. I know LLC is the usual choice, but I prefer to own real estate in my own name if there are no liability issues in order to avoid all the extra administrative costs. Also, in case business gets sued, I don't want the real estate to be something that can be lost in the suit, barring a pierce the corporate veil situation. But, on the other hand, I don't want the possibility that a customer of the business sues the landlord (me) personally and goes after everything I got. Please advise.

Thank you!

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